Prioritizing Value and Cost

Product Managers are inundated with so many models to establish various truths, especially when it comes to prioritization. Scorecards, roundtables, feedback… the lists of information sources and evaluation solutions is infinitely long. When it comes to manipulating the roadmap, prioritization decisions often come down to two key factors: Value and Cost. If something is valuable and easy, it’s what we’d often call low-hanging fruit. It’s that perfectly ripe apple without a worm in site sitting right at shoulder height. Conversely, something highly complex that provides little value – like grabbing a ladder, three ladder-holding-friends, and one of those apple-grabbers that never seems to work all in the pursuit of a rotten, worm-ridden Granny Smith – probably isn’t the way to go.

This seems obvious in apple picking terms, but it gets cloudy quick when developing a marketable product. Determining Value is often the more challenging aspect, whereas determine Cost is typically more scientific. You know you need the ladder to reach the apple at the top of the tree, you just don’t know how good or bad the apple really is until you get close enough for a good look. So, what are our verified, high confidence information sources to help us sort this out?

From the Value side, it’s important to consider both industry knowledge and customer perception. Marketing personnel, Sales teams, and Subject Matter Experts (SMEs) are all good sources of information, since they spend their time identifying niches and trends, as well as speaking directly with the end-users. They should be able to provide insight into what a customer wants and doesn’t want, what their headaches are with current products, and what they wish they had. If your product is entirely novel, try setting up meetings with trusted customers or group roundtables with them. Present your idea, show the solution, features list, etc. and ask for feedback. Customer love being part of the design process; not only does it make them feel valued, but it helps ensure the product that gets built will be a product they want.

Once we get our Value information, we can take it to our engineers and evaluate Cost. These conversations are highly variable depending on the technical knowledge of the product guys and the familiarity of the engineering guys, but the key point is this: transparency. Always push for full transparency between the business side’s goals and the engineering side’s solutions. Sugar coating how hard something’s going to be, or hyping up the potential benefit of a feature, is never going to help anyone. I’ve seen dozens of young, aspiring product folks inflate the potential benefit of a solution to convince their engineers it’s worth their time, simply to have it fall flat. When the engineers find out later on that this new, latest and greatest holy grail of a feature didn’t have all the backing they thought it did, you’ll have a difficult time convincing them of anything moving forward. Maintaining trust is key, since so much of what we do as Product Managers revolves around diplomatic interactions.

After a few transparent conversations with the engineers, you should have a decent idea of the Cost to evaluate against the Value. Of course, things change, issues arise, unforeseen circumstances, etc., but since those can happen in any given development process, the Cost evaluations are relatively robust to being severely misguided.

Once you collect Value and Cost information from the relevant groups, it’s the Product Team’s job to parse it and establish a baseline. These are often built with scorecards to gauge customer interest and calculate a Value, as objectively as we can utilizing our subjective information. These scorecards vary by organization, but a generic idea of what you’ll be evaluating is six basic factors:

• Business Value
• Customer Value
• Strategic Value
• Development Cost
• Implementation Cost
• Risk Assessment

A standard method for evaluating is to assign a score for each item out of 10. For Example:

• Business Value – 8
• Customer Value – 7
• Strategic Value – 4
• Development Cost – 3
• Implementation Cost – 4
• Risk Assessment – 6

You can get fancy with weighted scores, or just leave everything even. The feature above would combine for a Value score of 8+7+4 = 19 out of a possible 30, or 63%. Its Cost Score would be 13/30, or 43%. Combine the scores (32/60 = 53%) for a single value to evaluate by.

Once all features, ideas, processes, improvements, etc. have scores assigned to them, you can rank them based on their Value vs. Cost viability and use those ranking to help establish your priorities.

Reviewing our plotted Values and Costs, along with our combined Rank, we can establish which features or other items should be considered highest priority to help maximize our efforts. Investment, whether it’s money or time, is expensive, and it’s important to always be sure you’re moving in the right direction. Gather quality data, be sure to get information from every possible source, then utilize scorecards and prioritization tests to ensure you’re putting effort into the right places.

May 12, 2020